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March 01, 2017 at 11:22 AM
Officials at the New York Department of Financial Services have shown an early sign of comfort with efforts by China Oceanwide Holdings Group Co. Ltd. to acquire Genworth Financial Inc.
The department looked into the possibility of China Oceanwide becoming the parent of Genworth Life Insurance Company of New York, one of Genworth’s subsidiaries.
The department told Genworth that, based on a preliminary review of China Oceanwide, “there is no reason to believe that China Oceanwide is an unsuitable controlling owner of GLICNY,” Genworth said earlier this week.
Related: China Oceanwide agrees to pay $2.7 billion for Genworth
In related news, Genworth said it added $116 million in statutory reserves at its Genworth Life and Annuity Insurance Company unit in the fourth quarter of 2016 to support universal life products with secondary benefits guarantees. The company expects to add $95 million per year to the reserves for the next two years, mainly because of new information about how long older policyholders might live.
Genworth said it has a $1.5 billion margin for long-term care insurance at its Genworth Life Insurance Company unit, but a negative statutory margin of about $400 million for the LTCI business at GLICNY. For GLICNY, another method for calculating the margin came up with a negative margin of just $110 million. Genworth did not add cash to its LTCI statutory reserves, the company said.
China Oceanwide, a Beijing-based real estate development and financial services firm, announced plans in October to acquire Genworth for about $2.7 billion in cash. China Oceanwide also promised to provide a $525 million cash infusion for Genworth and $600 million in cash the Richmond, Virginia-based insurer can use to refinance or retire notes set to mature in 2018.
Genworth shareholders will vote on the deal March 7.
